“I told you I wanted the coverage”

When explaining the need for prompt and accurate documentation, it is important to understand the “why” behind the issue. For many folks, this is when they are able to truly “buy-in” and do what is needed.

A big reason behind the documentation “why” is that after an agency client suffers a loss only to find out that there was no coverage in place, it is truly amazing what type of response they will come out with. Here is a real-life E&O claim example:

The agency client called the agency to place a secondary home policy. Unfortunately, the client was not sure of the closing date and told the agency they would let them know. The agency account exec quoted the policy and sent it electronically to the client. Then unknown to the agency, the client purchased the home and claimed that they called the agency to place the policy. However, the agency had no record of such a phone call. When the closing took place, the client showed the quote to the bank and the bank allowed the mortgage to close without a true verification the coverage had been placed. A loss occurs and there is now a dispute as to whether coverage was technically in place. Since there was no way to verify whether a phone call had been made, this case was settled prior to trial.

What could the agency had done different?

Probably when the agency provided the quote, there should have been some stipulations noted on the quote on what would be required to bind coverage. Issues such as a signature on the application or a payment of some amount. Also, a statement such as “coverage is not bound until verified in writing by a licensed agency staff member”.

To me, this is clearly a case where the client forgot to call the agency to place the coverage. If the bank would have held fast and required a policy / binder / evidence of coverage, the client would have been forced to call the agency. But that did not happen. So, it sounds like the client took the position that when they (allegedly) called the agency, they told the account exec “I said I wanted the coverage”.

You never know what the agency client is going to state after they have suffered an uninsured loss but unfortunately, very rarely will they take the position that “yes, I screwed up, I forgot to call the agency to bind the coverage”. So, when interacting with your customers, it is probably best to assume that they are not going to take any responsibility for the error and then take some steps to protect the agency should a problem develop.



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